Title:

Big Push in Distorted Economies, Working Paper 21-07

PREVIOUS | NEXT

Big Push in Distorted Economies, Working Paper 21-07

DATE: March 26, 2021

PART OF: AUTHORS:

ABSTRACT: Why don't poor countries adopt more productive technologies? Is there a role for policies that coordinate technology adoption? To answer these questions, we develop a quantitative model that features complementarity in firms' technology adoption decisions: The gains from adoption are larger when more firms adopt. When this complementarity is strong, multiple equilibria and hence coordination failures are possible. More importantly, even without equilibrium multiplicity, the model elements responsible for the complementarity can substantially amplify the effect of distortions and policies. In what we call the Big Push region, the impact of idiosyncratic distortions is over three times larger than in models without such complementarity. This amplification enables our model to nearly fully account for the income gap between India and the United States without coordination failures playing a role.


Download (pdf) View Full Text

Share this page:


Diversity is critical to the Federal Reserve, and we are firmly committed to fostering a diverse and inclusive culture throughout the Federal Reserve System. Collections within FRASER contain historical language, content, and descriptions that reflect the time period within which they were created and the views of their creators. Certain collections contain objectionable content—for example, discriminatory or biased language used to refer to racial, ethnic, and cultural groups. These viewpoints and attitudes are inconsistent with our values, but the original descriptions are retained to ensure that they are not erased from the historical record.
Save & Share
less

Buera, Francisco J. (Francisco Javier) , Hopenhayn, Hugo Andreas , Shin, Yongseok and Trachter, Nicholas. "Big Push in Distorted Economies, Working Paper 21-07," Working Papers (Federal Reserve Bank of Richmond) (March 26, 2021). https://fraser.stlouisfed.org/title/3942/item/601674, accessed on November 29, 2023.

More Information
less

DIGITAL COPY SOURCE: Federal Reserve Bank of Richmond

SUBJECTS: THEMES:
Metadata (XML)
Metadata (JSON)